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PROJECT REPORT OF INDIAN SPICE INDUSTY

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Introduction
Out of the 109 spices listed by the ISO, India produces as many as 75 in its various agro climatic regions. India accounts for about 45% (2, 50,000 tons-2002-03) of the global spice exports, though exports constitute only some 8% of the estimated annual production of spices at 3.2 million tons (2002). Over all, spices are grown in some 2.9 million hectares in the country. Spice production in India, as much of the agriculture in the country, is undertaken in millions of tiny holdings and determine the livelihood of large number of the rural population. Spices exports have registered substantial growth during the last one decade. It has increased from 203398 tonnes valued MLN US $ 241million in 1995-96 to 350363 tonnes valued MLN US $ 593 million in 2005-06, registering an annual average growth rate of 9.4% in value terms. During the year 2006-07, the spices export from India has registered an all time high both in terms of quantity and value. In 2006-07 the export of spices from India has been 373,750 tonnes valued MLN US $ 793 million registering an increase of 34% in value over 2005-06. India commands a formidable position in the World Spice Trade with 47% share in Volume and 40% in Value. India's spices export is zooming. Exports of spices and spice products from the country during April-June 2008 have registered an increase of 23 per cent in terms of quantity and 28 per cent in terms of Rupee value. In Dollar terms the increase is 26 per cent. According to figures released by the Spices Board, the cumulative figures for April -June 2008 is estimated at 1, 48,550 tonnes valued at Rs.1375.05 Crores (US $ 329.60 million) as against 1,21,180 tonnes valued at Rs.1073.50 crores (US $ 260.57 million) in corresponding period last year. Spice oils and oleoresins including mint products contributed 35% of the total export earnings. Chilli contributed 24 per cent followed by cumin 11 per cent, pepper nine per cent and turmeric five per cent. Exports during June 2008 also registered increase with an export of 44,690 tonnes of spices valued Rs.446.73 crores (104.33 million US $) as against 38,960 tonnes valued

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Rs.382.77 crores (93.90 million US $) in June 2007. The major items exported during June 2008 are Chilli, Cumin, and Mint products, Spice Oils & Oleoresins, Pepper and Coriander. During Apr-June 2008, the export of Cardamom (Large), chilli, turmeric, coriander, cumin, fenugreek, garlic, other miscellaneous seeds, vanilla, curry powder, spice oils & oleoresins and mint products are higher in terms of both quantity and value as compared to the same period of last year. In the case of export of spices like Pepper, Cardamom (Small), celery and other miscellaneous spices have shown increase in value terms only. However, exports of ginger, fennel and nutmeg & mace have declined both in terms of quantity and value as compared to last year.

During April-June 2008, a quantity of 7,550 tonnes of pepper valued Rs.126.23 crores was exported as against 8,600 tonnes valued Rs.121.58 crores of last year. The average export price of Pepper has gone up from Rs.141.37 per kg in 2007 to Rs.167.19 per kg in 2008. During the period, 67,000 tonnes of chilli valued Rs.333.53 crores was exported as against 57,625 tonnes valued Rs.321.36 crores of last year, registering an increase of 16 per cent in quantity and four per cent in value terms. The traditional buyers of Indian chilli viz. Malaysia, Indonesia and Sri Lanka continued their buying this year also. In addition to this, Pakistan was also very active in the market. The mandatory quality testing of chilli and chilli products by the Board has also helped India to achieve this higherlevel of export in chilli. The export of Cumin has shown an increase of 280 per cent in quantity and 253 per cent in value terms as compared to last year. The reported crop failure in other major producing countries viz. Syria, Turkey and Iran helped India to achieve this higher level of export in Cumin. The export of value added products like Curry powder, spice oils & oleoresins and mint

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products have shown substantial increase both in terms of quantity and value as compared to last year. During April-June 2008, a total quantity of 3,375 tonnes of curry powder valued Rs.36.27 crores has been exported as against 2,545 tonnes valued Rs.23.53 crores of last year. During April-May, the export of spice oils and oleoresins has been 2,150 tonnes valued Rs.204.61 crores as against 1,605 tonnes valued Rs.131.35 crores of last year. Against the export target of 425,000 tonnes valued Rs.4, 350.00 crores (US$ 1025.00) for the year, the achievement of 148,550 tonnes valued Rs.1375.05 crores (US$ 329.60 million) up to June 2008 is 35 per cent in quantity and 32 per cent in both dollar and rupee terms of value. Spices industry India produces 2.5 million tonne to 3 million tonne of spices annually. India produces spices of different categories worth around US$ 3 billion. In terms of volume and value, India accounted for 46 percent and 23 percent in value of global spice trade. (Source: Spices Board India) India accounts for 25-30 per cent of world’s pepper production, 35 per cent of ginger and about 90 per cent of turmeric production. Among the Indian Federal states, Kerala tops in pepper (96 per cent), Cardamom (53 per cent), Ginger (25 per cent) production in the country. Andhra Pradesh leads in Chilli and Turmeric production in the country with 49 per cent and 57 per cent. In coriander, cumin and fenugreek production in the country, Rajasthan emerges as the largest producer with 63 per cent, 56 per cent and 87 per cent. (Source: All India Spice Exporters Forum) The world spice trade is estimated at US$ 1.5-2 billion in terms of value and 500,000 tonnes in terms of quantity.

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EXPORTS OF SPICES FROM INDIA India can now boast as the monopoly supplier of spice oils and oleoresins the world over. In the case of curry powders, spice powders, spice mixtures and spices in consumer packs, India is in a formidable position. The consistent effort of the Board during the last one decade has improved the share of the value added products in the export basket to 60%

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Indias's share in world trade of spices: 2007-08

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ESTIMATED EXPORT OF SPICES FROM INDIA DURING APRILDECEMBER 2008 COMPARED WITH APRIL-DECEMBER 2007

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Trade channels for market entry

Distribution channels for spices and herbs Brokers/Agents Brokers are intermediaries that bring buyers and sellers together, for which service they get paid a commission. Spices and herbs do not physically come into the possession of brokers. Customers can be trading companies, but are mostly processors. Especially when a trader or importer is unknown, a broker will be used as an intermediary to diminish the risk involved. In certain cases, brokers represent a specific party either as its selling agent or its purchasing agent. Traders/importers These specialised traders import on their own account and sell to grinders/processors and directly to major end users. They mainly buy bulk quantities of unground spices and resell them at an increased price. The importer is responsible for all costs associated with import, such as duty, terminal fees, unloading charges, and local delivery and warehouse costs.

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The major trading centres for spices are New York, Rotterdam, London, Hamburg and Singapore. Organic traders are often specialised in a broader range of organic products, instead of purely herbs and spices. Grinders/processors Grinders and processors purchase raw spices and perform cleaning, grinding and (retail/catering) packaging. They have central warehouses for distribution to industrial users throughout specific areas, or they deliver directly to the distribution centres of supermarkets or institutional users. Next to the (few) specialised organic grinders and processors, conventional grinders and processors are also increasingly making their inroads into the organic sector. End users The largest user group is the food-processing industry. Requirements are purchased either from grinders/processors or directly from importing/trading companies, and in some (rare) cases directly from foreign producers.

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CHALLENGES 1.Market access requirements
As a manufacturer in a developing country preparing to access foreign markets, one should be aware of the market access requirements of your trading partners and the governments. Requirements are demanded through legislation and through labels, codes and management systems. These requirements are based on environmental, consumer health and safety and social concerns. You need to comply with foreign legislation and have to be aware of the additional non-legislative requirements that your trading partners in the particular nation might request. Legislative requirements For Example: European legislation is compulsory for all products traded within the EU. Therefore, as an exporter in a developing country you have to comply with the legislative requirements that are applicable to your products Non-legislative requirements Social, environmental and quality-related market requirements are of growing importance in international trade and are often requested by buyers through labels, codes of conduct and management systems. Packaging, marking and labelling.

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Export development and promotion
1. Adoption of hi-tech & technology up-gradation 2. Setting up/up gradation of QC Lab 3. Sending business samples abroad 4. Printing promotional literatures/brochures 5. Market Development Assistance (MDA) 6. Grant in aid for participation of exporters in international trade fairs/exhibitions 7. Participation of exporters in International meetings/seminars and delegations
8. Quality Marking Quality has a special focus in Spices Board’s promotional strategy. To foster Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP), Spices Board approves use of Quality marking such as ‘Indian Spices Logo’, and the Spice House Certificate.

The Indian Spices Logo is awarded to those who export spices in branded consumer packs. The award is given after a two tier inspection to satisfy compliance with regard to adherence to practices ensuring quality, hygiene and safety. Prior certification under HACCP is a precondition for awarding Indian Spices Logo. Nineteen (19) spice exporters are awarded with Indian Spices Logo. Board has registered Indian Spices Logo with the Trade Registry Authorities in 18 countries. Spice House Certificate is awarded to exporters of spices who possess the specified infrastructural facilities for cleaning, processing, grading, packaging and warehousing as the case may be. So far 58 units have been awarded Spice House Certificate. Registration of brand name The objective of the programme viz., registration of brand name is to support export of spices/spice To ensure quality, Spices Board assists registered exporters in acquiring ISO 9000 series accreditation. Similarly, processor exporters will be given grant-in-aid for consultancy and certification charges for acquiring HACCP Quality System.

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Other Promotional and developmental Activities 1. 2. 3. 4. 5. Export Oriented Research Development of location specific hybrids Viable model for pest management Bioagents for disease control Farm advisory service

PUBLICITY AND PROMOTION
Image building, creation of awareness, tapping opportunities for promotion, generating platforms for publicity, dissemination of information, compilation and publication were the highlights of the Publicity and Promotion initiatives of the Board. Popularizing and promoting spices and its multi-range of value added products, generating awareness and publicity for the different schemes and programmes, broadcasting the very basic information for the stake holders in the spice industry and building institutional image were in focus. 1. Participation in international fairs. The Board has successfully organized participation in different International fairs in different countries. The fairs were selected in consultation with the spice trade based on importance from point of view of market potential and exports. Thrust was given on increased participation of the exporters in these fairs, with opportunities and back up support for showcasing capacities and capabilities. The Board’s pavilions and stands portrayed the overall strength and authenticity of Indian spices through display of samples of products and graphic and pictorial presentations. The fairs yielded very serious trade enquiries, which were systematically passed over to the trade for further follow-ups. 2. World Spice Congress The Ninth World Spice Congress was held in Goa during 28-30 January 2008. Over 150 overseas delegates from 35 countries and 264 Indian delegates attended the event organized in association with the All India Spices Exporters Forum. The theme of the Congress was “Harmonization – The emerging global need”. 3. International media relations Korean Television team: The Korean national T.V. team “MBC” visited Cochin to produce a programme on Spices to be incorporated in their feature “Ganga – the temptations of the Golden Land”. The Board provided ground support and interviews for the team. The programme was meant for telecast in Korea. Journalists from Bhutan: A Team of journalists from Bhutan visited the Spices Board and held interaction on the various activities of the Board. The team consisted of senior journalists’ from Bhutan national dailies and Bhutan Broadcasting Service.

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Culinary writer from New Zealand: The Board also invited New Zealand’s famous culinary and travel writer, Mrs. Charmian Smith to visit the spice plantations, factories besides having interaction with local culinary experts. 4. Domestic media relations Talks and discussions were organized on various topics relating to marketing and cultivation of spices through the networks of All India Radio and Doordarshan in different parts of the country. The Board sponsored programmes on spices through the All India Radio Station at Madikeri, Karnataka for a period of one year. Programmes on post harvest practices in chillies were organized during the year through the All India Radio stations of Vijayawada, Kothegudom, Warrangal and Hyderabad in Andhra Pradesh, Doordarshan stations in Hyderabad and Vijayawada and ETV-2 channel. Live phone in programmes for clarifying doubts and to promote programmes of the Board were organized in the Krishi Darshan segment of the Doordarshan in Andhra Pradesh and Kerala.The film on cardamom produced by the Board was repeatedly telecast in Doordharshan – Kerala network. 5. Press Releases/Press Conferences A series of press releases were issued to the national media on trade and commerce in spices, periodical reviews on exports, availability of planting materials, major events like international fairs, World Spice Congress, campaigns for farmers, etc. Press conferences were organized on major events coinciding with the organization of the World Spice Congress, exports performances, aflatoxin campaign on chillies in Andhra Pradesh. Periodical broadcast and telecast of sponsored programmes, talks and discussions, radio spots and commercials were done in electronic media. 6. Facilitating visit of agri students The students of agriculture/horticulture, home-science etc., from various universities visited the Board to understand the programmes of the Board. Agriculture students from the Kerala Agricultural University, Vellayani, Trivandrum, home science students from the St.Theresa’s college, Ernakulam, Post Graduate Students from Nadar Mahajana Sangam Vellaichamy Nadar College, Virudhunagar, Tamil Nadu etc., visited the Board. 7. Booklets and posters Literature in Telugu language to cater to the requirements of the Chilli growing farmers in Andhra Pradesh on Chilli Aflatoxin and posters were designed and printed for use during the Chilli aflatoxin campaign in Andhra Pradesh. 8. Spice distribution/gift boxes The Board developed two new different types of Gift hampers for spice promotion purposes. These boxes were used packing spices for presentation as gifts to international tourists and to international delegates visiting the Board. 9. Production of films /CDs A new film on post harvest practices in chillies highlighting the aflatoxin issues in chillies was made by re-editing an existing film titled “Karamlo Theepthi”’produced by

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the Board seven years ago. Aspects relating to aflatoxin in chillies were highlighted in the film, copies of which were taken in CD Rom format for screening at village level meetings during the campaigns in the chilli growing districts of Prakasam, Warrangal, Guntur and Khammom districts of Andhra Pradesh.

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